Law No. 27,802 (the “Labor Modernization Law”) was published in Argentina’s Official Gazette on March 6, 2026. The law introduces changes that directly affect employers’ human resources, payroll, labor relations, and legal functions and includes incentives that could result in increasing registered employment.1
WHY THIS MATTERS
Overall, the Labor Modernization Law is intended to:
- Moderate payroll-related costs – particularly those triggered upon termination
- Mitigate employee and government claims by narrowing presumptions and refining liability rules
- Simplify registration and labor documentation through centralized/digital mechanisms
- Promote formal employment through lower employer social security contributions and by channeling social security resources to termination-related payments
Key Changes Introduced by the Labor Modernization Law
Reduction of payroll-related costs, with a focus on termination costs
The law includes several measures that may reduce the cost of termination and related contingencies. Highlights include:
- Changes to the severance calculation base (focused on monthly, normal and habitual remuneration and excluding annual bonus, vacation, and non-monthly items).
- Reinforced severance cap linked to the relevant collective bargaining agreement average salary, and the possibility of replacing the statutory severance regime with alternative funds or termination systems (through collective bargaining agreements or employer decisions, at the employer’s cost).
In addition, certain concepts are clarified as non-wage or non-accruing (e.g., dynamic compensation not creating vested rights) and specific caps are introduced for certain deductions/withholdings (e.g., union contributions).
Measures to mitigate claims by employees and government agencies
Several amendments are expected to reduce litigation exposure and administrative claims:
- The law narrows the application of the employment relationship presumption in defined non-dependent arrangements (where invoicing/receipts and formal bank payments exist) and clarifies exclusions from the Labor Contract Law (LCL) for certain relationships and categories.
- It also refines joint and several liability rules in intermediation and outsourcing scenarios – placing emphasis on registration and documentary controls – and limits solidarity in corporate group and business transfer cases primarily to fraud or lack of due diligence/knowledge.
In addition, it reinforces the incompatibility between LCL remedies and damages claims under the Civil and Commercial Code and provides that court judgments in deficient registration cases must be referred to the tax authority for the assessment of omitted contributions.
Registration and process simplification for employers
The law promotes a shift toward centralized and digital labor documentation. In particular, it eliminates the mandatory payroll book concept and centralizes registration with the tax authority (ARCA).
It also allows for digitalization and retention of labor documents for ten years and recognizes digital/electronic signatures for payroll receipts and resignations.
Service certificates may be delivered physically or digitally and will be deemed compliant when made available through verifiable means or via ARCA’s platform.
Incentives to registered employment: lower employer contributions and resource allocation for termination payments
The law introduces incentives intended to expand registered employment and improve predictability of termination payments.
- Key mechanisms include the Labor Assistance Fund (FAL), which is intended to support the payment of certain termination-related items for eligible registered employees, funded through an employer contribution (with different rates depending on employer size) and administered by ARCA.
- As a counterpart, the law contemplates reductions in employer social security contributions in similar percentages.
In addition, a labor formalization incentive regime (RIFL) provides a significant reduction in employer contributions for qualifying new hires over a period of 48 months, and a regularization program (PER) offers benefits for employers that regularize unregistered or incorrectly registered employment relationships under the conditions and timelines to be set by implementing regulations.
KPMG INSIGHTS
In light of the changes, employers might wish to consider the following:
- Assess the impact on termination templates, severance provisioning, and payroll configuration (severance base, caps, non-wage items and deductions).
- Review contractor/outsourcing governance and documentary controls to manage joint liability exposure.
- Identify required adjustments to registration and labor documentation processes to align with ARCA-centric, digital formats.
- Evaluate eligibility and governance for FAL/RIFL/PER incentives and prepare an implementation roadmap once regulations are issued.
If assignees and/or their programme managers have questions about how the above‑noted measures may impact them and/or what steps they may need to take, they are encouraged to consult with their usual tax or employment law adviser or a member of the People Services team with KPMG in Argentina (see the Contacts section).
ENDNOTE:
1 Boletín Oficial de la República Argentina, (in Spanish) “Ley 27802,” published on March 6, 2026.
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Disclaimer
The information contained in this newsletter was submitted by the KPMG International member firm in Argentina.
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